A Personal Loancan often prove to be an excellent way of dealing with financial needs that were either unexpected or way too high for one to fulfil. These needs may have various faces, such as home renovation, business expansion, debt consolidation, travelling, studying, and getting married amongst others. In the present day scenario, it has become exceedingly easy to Apply for a Personal Loan, and get an approval on the same.

Best Approach to Avail a Personal Loan

If you too happen to be on the lookout for a Personal Loanto the tune of Rs. 5 Lakh, let us guide you through the best approach to get the loan approval swiftly.

Make Sure You Are at the Right Age

Most banks and NBFCs prefer borrowers between the age of 21 and 60for Personal Loans; simply because, these are the most productive years of a person’s life, where they can generate ample income. While people younger than 21 years of age, are often studying, or are on the lookout for a source of employment, those beyond the age of 60 are usually retired, approaching retirement, or have a shrinking source of income. As can be understood, both the scenarios are unfavourable, when seen from the perspective of a lender offering an unsecured loan.

Just in case, you are below 21 or above 60 years of age and need the loan anyway, you may request a family member or friend to be a co-applicant to increase your chances of loan approval.

You Must Enjoy a Stable Source of Employment

Whether you are a salaried individual, a business owner or a self-employed professional, it is crucial that your source of employment is stable, and that you can furnish a proof of the same. Most banks consider an employment history in the current field of work, spanning at least 2 years as ideal. However, if you work for a listed company where your career growth seems promising the bank may relax the minimum experience requirement.

You Must Enjoy a Minimum Level of Income

In a vast majority of cases, banks need Personal Loanapplicants to earn at least Rs. 10,000 to Rs. 15,000 per month. The mandatory income varies from one bank to another, and also varies on the basis of the city where the borrower resides. For instance, the minimum monthly income required for borrowers residing in Tier 1 cities is often higher than those belonging to small cities.

Since you are considering taking a loan of Rs. 5 lakh, it is crucial that you are able to comfortably pay your EMI, while still taking care of your living expenses. As a rule of thumb, your overall EMI outgo should not exceed 40% of your net income. Considering that you do not have any other debt under your name and that your Personal Loanof Rs, 5 Lakh is to be repaid in 5 years at an interest rate 12.5% per annum, you must earn a minimum of Rs. 28,125 per month, to be eligible for this loan. This level of income will ensure that you can comfortably pay off your EMI of Rs. 11,250, while using the remainder of your income to manage other expenses.

Your Credit Rating Must be Good

While the stability of your employment and your steady stream of income are two of the most imperative factors, yet another aspect that proves to be a game changer when it comes to Personal Loan approvals is your Credit Score. Essentially, the score is used by banks and other lenders to determine your creditworthiness on the basis of your past repayment history. If your score is good enough, say 700 or above, the bank will be more than willing to offer you the loan at favourable terms. On the other hand, if your track record is poor, and plagued with outstanding dues and default records, the lender may either turn down your application or approve your loan at a comparatively higher rate of interest as a measure to lower their own risk.

Best Places to Get a Personal Loan

Now that you are aware of some of the most promising ways to ensure that your Personal Loan application gets approved, and you can make the most of the disbursed amount, let us take a quick look at the best places to look for a Personal Loan-

Commercial Banks

With the help of commercial banks, you can avail some amazing credit alternatives such as Axis Bank Personal loan or Yes Bank Personal loan amongst others. These loans are available for salaried people, business owners as well as self-employed professionals. Taking a loan from a commercial bank is suggested when you have steady employment with the required level of income as well as experience.

Non-Banking Financial Companies

Personal Loans from NBFCs are known for their minimal documents, high approval rate as well as swift disbursal, making them perfect if you are in need of urgent funds.

Co-Operative Banks

Ideal for existing customers, Personal Loans from co-operative banks work best when your income or experience level isn’t up to the expectations of a commercial bank.

Credit Card Providers

This source for Personal Loans may not be ideal if you need a large sum of money such as Rs. 5 lakh since the funds offered as loan are limited to the credit limit of the borrower. However, if you need a smaller amount for a short period, this is by far the fastest way of getting access to the much-needed cash.

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.

Talk to our Loan Specialists toll-free at 18001034004 to know more about our products and offers.